Question NW3043 to the Minister of Finance
10 November 2023 - NW3043
Wessels, Mr W to ask the Minister of Finance
(1)Whether all state departments and public entities still pay their monthly contributions on behalf of their employees to third parties such as the Government Employees Pension Fund, Medical Schemes and the SA Revenue Services; if not, (a) which (i) state departments and/or (ii) public entities are in arrears with contributions in this regard, (b) what total number of employees are affected in each case, (c) by what amounts are such state departments and/or public entities in arrears and (d) what steps are being taken to rectify the matter; (2) whether any shortages in the fiscus played a role in the specified state departments and/or public entities being in default; if not, what is the position in this regard; if so, what are the (a) relevant details and (b) risks of (i) state departments and (ii) public entities continuously defaulting with contributions to the third parties?
Reply:
Government Employees Pension Fund (GEPF)
(1) As of the conclusion of the first quarter of the fiscal year 2023/2024, all state departments and public entities participating in the Government Employees Pension Fund have been diligent in remitting their monthly contributions on behalf of their employees to the Fund. The data indicates that 99.90% of the total monthly pension contributions due were received and reconciled punctually as mandated by the relevant legislation.
(a)
(i) The minor discrepancy of 0.10% does not reflect arrears from any particular state department or public entity but rather pertains to adjustments necessitated by various scenarios such as service termination or changes in service conditions.
(ii) Consequently, there are no specific public entities identified as being in arrears with contributions.
(b) Given the nature of the discrepancy, it does not affect a quantifiable number of employees in a manner that would result from arrears in contributions.
(c) The financial impact represented by the 0.10% discrepancy is being analysed and resolved on a regular basis. The administrator conducts a reconciliation process which is a routine and rigorous part of ensuring compliance and accuracy in the contributions made to the Fund.
(d) To rectify the matter and ensure complete reconciliation:
- A robust process of reconciliation is conducted monthly to address any discrepancies and ensure that contributions reflect the accurate service conditions of all employees.
- Any adjustments required are being handled expeditiously, with a standard resolution timeframe of 30 days.
- Continuous monitoring and engagement with all participating employers are being maintained to ensure timely payment and accurate reporting of contributions, thus fostering a culture of compliance and transparency.
(2) No. All the concerned state departments and public entities have maintained a consistent track record of timely contributions, irrespective of the fiscal situation
South African Revenue Service (SARS)
1. From an employer point of view, SARS pays all statutory contributions on behalf of its employees to third parties such as Government Employees Pension Fund, Medical Schemes and the South African Revenue Service (PAYE, UIF and SDL) in full on a monthly basis. The current CC measures has no negative impact on the monthly commitments for the current staff establishment covered by the grant allocation.
From a Revenue Administration point of view, SARS is responsible for the collection of PAYE, UIF and SDL part of the payroll creditors (contributions) from respective employers. Pension and Medical Aid contributions are paid directly to the respective fund administrators.
(a) Of the 5,303 Departments and Public entities, 4,899 (92%) pay their PAYE, VAT and other tax obligation on time. In observing taxpayer confidentially provision of the Tax Administration Act, we are unable to provide any further specific taxpayer information including the list of the defaulting taxpayers as prompted by the question, it should be noted further that the specific entities can provide directly to the parliamentary oversight bodies such information.
(b) SARS information is limited to Employer account and the defaulting taxpayer debt is at an aggregate entity level. Information on the affected Employees is not yet available from the current Tax Administration data.
(c) The balance of 404 entities (from the total of 5,303) owe SARS R5.9bn in debt for the 2023/24 fiscal year comprised of PAYE R2.4bn, VAT R3.5bn. Of the R5.9bn debt R1bn is under dispute leaving a balance of R4.9bn undisputed of which R2.9bn is older than 3 years.
(d) SARS debt collection processes are employed to follow up on defaulting taxpayers and arrangements made to enforce that the debt is settled within reasonable time where feasible. Engagements with National Treasury to deduct from Grants the necessary amounts to settle taxes owed to SARS have been evoked as the last resort following lack of cooperation or lack of positive response from defaulting taxpayers. It is genuinely concerning for State Organs not to comply with the very tax laws that generate revenue that enables them to exist in order to delivery on their respective mandates of rendering public service to SA citizens who are the taxpaying community.
2. Prior to the Cost Containment measures coming into effect, SARS records have over the years noted an increasing level of Departments and SOCs indebtedness to SARS. There is no correlation between the current Cost Containment measures and the increase in the Departments and SOCs inability to pay their tax obligations over to SARS. This will be monitored closely in the coming months to observe trends post the implementation of the Cost Containment measures.
(a) Not applicable
(b) (i) Not applicable.
(b)(ii) Not applicable